On consecutive days earlier this month, the DOJ Antitrust Division experienced early setbacks in two cases representing one of the Division's key priorities under the Biden Administration. These cases were the first-ever criminal jury trials alleging charges of collusion in labor markets.
On April 14, in the Eastern District of Texas, the jury in United States v. Jindal, et al. delivered a not-guilty verdict for both individual defendants on charges of wage fixing, and a guilty verdict against one defendant for obstruction of justice. The defendants had been indicted a year earlier on charges of violating the Sherman Act by agreeing with co-conspirators to pay lower rates to physical therapists and physical therapist assistants in areas of North Texas. The judge had denied a motion to dismiss those charges, holding that wage-fixing conspiracies are per se violations of the Sherman Act akin to price fixing, that the per se standard does not unconstitutionally strip juries of the ability to evaluate intent as an element of the offense, and that the novelty of the criminal charge did not violate the defendants' due process rights.
A day later, on April 15, in the District of Colorado, the jury in United States v. DaVita, Inc., et al. delivered not-guilty verdicts for all defendants in a case alleging antitrust violations for agreements between employers affecting hiring. In July 2021, the defendants were indicted on charges of maintaining unlawful agreements with three other companies that allegedly restricted them from soliciting or hiring employees from each other. In January, the judge had refused to dismiss the charges, holding that no-poach conspiracies may, in certain circumstances, constitute criminal violations of the Sherman Act—the first time that any court weighed in on the issue. Nevertheless, the weakness of the evidence and the jury instructions approved by the judge ultimately proved fatal to the prosecution. The judge allowed the defendants to present procompetitive justifications for their conduct and required the government to prove that the defendants not only entered knowingly into the alleged agreements, but also did so with anticompetitive intent. Under the judge's rulings, the Division would have a steeper hill to climb in any future criminal non-solicitation cases.
Following the Jindal verdict, the Antitrust Division commented that "[i]n no way should the verdict today be taken as a referendum on the Antitrust Division's commitment to prosecuting labor market collusion." And following the DaVita verdict, the Division stated that it "remain[s] committed to enforcing the antitrust laws in the labor markets." The Division also has said that it sees important positive outcomes from these cases, notwithstanding the jury verdicts, because the motion-to-dismiss rulings in both cases held that there is potential criminal antitrust liability for labor-market conduct.
While the Division says it will continue to aggressively prosecute cases of alleged collusion in labor markets, there are a few insights to take away from these verdicts that may guide future enforcement:
- The Division may focus on bringing cases where there is clear evidence of anticompetitive intent to allocate a market. For example, evidence showing consciousness of wrongdoing, such as deleted emails and secretive conduct, can be very powerful to juries. On the other hand, conduct that was undertaken openly may present challenges in front of juries.
- The Division may adjust its trial presentations to present greater evidence of harm to workers. For example, in spite of the Jindal ruling that wage fixing is per se illegal, juries may still be hesitant to convict defendants and potentially send them to prison if it is unclear whether anyone was actually harmed by the conduct. And in non-solicit and no-hire agreement cases, juries may look at whether the charged agreement actually resulted in ending meaningful competition for workers.
- The Division may reduce its reliance on immunized cooperating witnesses. Both the Jindal and DaVita cases were based on the testimony of immunized witnesses, and neither case featured a cooperating witness who had pleaded guilty to the same conspiracy. But given the novelty of alleged criminal liability of labor-market antitrust offenses, the Division may find it hard to convince parties to plead guilty and cooperate until it's able to convict defendants for labor-market offenses at trial.
It will be interesting to observe how the Division adjusts its litigation strategies in future criminal antitrust labor cases. The Division has four upcoming trials, and the next scheduled trial, United States v. Hee, et al., involves combined wage-fixing and hiring related charges against a health-care staffing company and its former manager. The indictment alleges that the defendants conspired to fix the wages of, and allocate the market for, nurses providing care to "medically fragile" students at public schools in Clark County, Nevada. This case may present a further test for the jury appeal of wage-fixing and employee non-solicit legal theories.
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